What small business employers need to know about pay equity
Pay equity has become a hot topic on state and federal levels in recent years, with most states enacting pay equity legislation that varies from being only gender-specific to laws that incorporate any form of pay discrimination based on age, race, creed, color, disability, marital status, sex, national origin, ancestry, sexual orientation, arrest record, conviction record, or military service.
But on January 1, 2021, Colorado took pay equity further with its Equal Pay for Equal Work Act.
Its version introduced a new level of pay transparency by providing wage discrimination and employer provisions affecting many more aspects of hiring and employment practices.
Colorado’s new law includes:
- Employees are not allowed to inquire about compensation history during recruiting
- Job posting requirements to all internal employees to ensure “promotional opportunities,” with few exceptions
- The inclusion of wage or compensation ranges on all job postings
- The description of bonuses, and commissions, as well as “other perks” on job postings
The law also stipulates that remote jobs posted publicly that could be performed in Colorado must also contain compensation information, regardless of where the company is headquartered.
Also long gone are the days of prohibiting employees from discussing pay (which, technically, has been protected by the NRLB as a potentially concerted activity since 1997.)
You may think that because your employees do not live and work in Colorado, you do not need to be aware of Colorado labor laws. However, Colorado was the start of a trend, with other locations immediately following suit with some type of pay transparency requirements, namely: New York City, California, Washington State, and Rhode Island. More cities and states will most certainly follow.
So how do employers navigate Pay Equity in 2023 and beyond?
Here is a simple checklist for equitable and transparent pay programs:
- Review your state-specific for job descriptions, postings, interview questions, and pay transparency in relation to Pay Equity.
- Only include knowledge or skill qualifications on the Job Description and posting that are necessary to do the job.
- For positions with room for career growth, specify future, desirable, but not mandatory skills or qualifications as “a plus.”
- Review and update your physical requirements to ensure you are not inadvertently excluding people with disabilities who can do the job with reasonable accommodation. For example: Ask yourself, “Do potential employees need to stand or sit? Or can they just be stationary?”
- Avoid exclusionary language in your job postings that attract or dissuades applicants of a certain age, race, gender, etc.
- For example, avoid the terms like “Digital Native” or “Culture Fit”, and instead use terms like “Passionate about Technology” and “Culture Add.”
- Remember, certain words appeal to gender, age, and race differently. Re-word your postings to remove them.
- Conduct an internal audit of employees in the same jobs. If seniority/tenure, merit increases, or performance commissions and bonuses don’t account for a gap, what steps can you take and how fast can you adjust your budgets to narrow it? Make a plan, and move forward with it.
- When you promote someone who may have entered the organization at a lower rate than others for no particular reason, are you limiting their raise? Or are you bringing them in line with others doing the same new job with the same skill sets? If promotions aren’t fixing previous wage disparities, fix your compensation plan to ensure equitable wages are applied when entering new roles.
- Assess your recruitment and job posting sources and make corrections.
- Are you overlooking internal candidates?
- Are your online recruiting sites attracting only a certain type of candidate?
- Are you attending college recruiting fairs but not posting those jobs somewhere older millennials and GenXers can access?
- And finally, when you are preparing to hire new employees, don’t ask them what their salary requirements are, rather, tell them the pay range or rate you are expecting to pay. i.e., tell them what you feel the position is worth, so that some new hires don’t under value themselves from the start.
Pay equity done right is not about quotas or selecting someone not the most qualified for the job. It’s about removing obstacles for overlooked and/or excluded candidates and paying everyone equitably once they are placed in a role. If you’re not sure how to start, give your HR Consultant a call.
At Inspiring HR, we uncomplicate HR and empower small businesses. Visit our Resources page for instant access to Labor Law Reference Guides, Remote Work Reference Guides, and more! Ready for trustworthy and helpful HR consultation? Contact Us today!
This article does not constitute legal advice, and there are subtle variations in employment law as it pertains to this topic, depending on where your business operates. It is strongly suggested that you seek consultation or legal counsel before making policy decisions.